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Norges Bank has decided to keep the policy rate unchanged, signaling slower and smaller interest rate cuts until the end of 2027 due to higher-than-expected inflation. The bank is cautious about lowering rates prematurely, as inflation pressures remain significant. Analysts predict that the krone will remain stable in the coming months, with potential rate cuts not expected until at least June, pending further inflation data and economic developments.
Uncertainty stemming from U.S. trade policy under Trump is dampening business sentiment and could significantly impact consumer behavior. If consumers reduce spending due to fears of unemployment and rising prices, the foundation of U.S. growth may weaken, leading to a potential economic downturn. Confidence, once lost, can take a long time to recover, posing a high price for the economy.
The Cac 40 index faces short-term risks amid a volatile environment influenced by US economic concerns, including a potential contraction in growth and deteriorating consumer confidence. While European markets, bolstered by Germany's fiscal stimulus and ECB policy adjustments, show promise, the Cac 40 remains within a bullish channel, currently testing lower support levels. A range between 7,000 and 8,260 points may emerge, but fundamental reasons for caution are limited in the coming months.
Inflation in South Korea is rising, potentially halting the Bank of Korea's rate cut cycle, with the policy rate expected to remain at 2.75% during the April meeting. The BoK is closely monitoring core inflation and the USDKRW exchange rate amid political uncertainty and global risk-off sentiment. Processed food prices are anticipated to increase, while fresh food prices may rebound due to adverse weather. The government plans to freeze utility fees in the first half of 2025 and boost spending to stabilize food prices, with a possible rate cut in May depending on inflation trends and currency fluctuations.
Bank of America reports a troubling rise in the cost of living, with consumers facing increased expenses for housing, insurance, car payments, and utilities. While declining gasoline prices offer some relief, many are unable to offset these essential costs, leading to reduced spending on discretionary items across all income levels. The financial strain is particularly acute for lower-income households, as fixed costs dominate their budgets.
European gas prices have stabilized around EUR40 per MWh, with limited potential for further decline due to improved supply conditions and increased LNG imports, which reached a March high not seen since 2017. Despite current storage levels being below the five-year average, the higher prices compared to last year are encouraging continued LNG sales to Europe.
A recent bank survey reveals that one in four people in Finland have no savings, with 32% of women and 24% of men reporting this lack. Over half of respondents can only cover up to three months of expenses if income is lost, highlighting the financial strain on middle-income households amid rising living costs. However, signs of improvement are anticipated, with expectations of falling interest rates, better employment, and wages increasing faster than inflation in the coming years.
Gold prices have surged past $3,100 per troy ounce, marking a 19% increase in the last quarter, the highest since 1986. This rise is driven by uncertainty over US tariff threats and expectations of interest rate cuts by the Federal Reserve, despite inflation risks that may hinder such cuts. However, analysts warn of a potential setback for gold prices amid these economic concerns.
In March, Eurozone inflation is projected to slow to 2.2%, down from 2.3% in February, with core inflation also decreasing to 2.4%. This trend supports expectations of continued interest rate cuts by the ECB to stimulate economic recovery, despite rising inflation in Italy. The euro weakened against major currencies, with EUR/USD dipping below 1.08, indicating potential further declines if support levels are breached.
Eurozone inflation has decreased to 2.2% in March, prompting some economists to anticipate further cuts to key interest rates by the ECB at its April 17 meeting. The central bank aims for a medium-term inflation target of 2% and has already reduced rates six times since summer 2024. Currently, the deposit interest rate stands at 2.5%, with Germany also reporting a 2.2% inflation rate.
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norges bank maintains policy rate amid rising inflation and economic uncertainty
11:55 02.04.2025
uncertainty in us trade policy threatens consumer confidence and economic growth
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Cac 40 faces volatility amid US growth concerns and European resilience
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09:20 02.04.2025
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